Wealth Tax

New Orleans There was an interesting piece in the Times, buried in the business section that pointed out pretty clearly that real money to achieve more equity in countries like the USA has to do with taxing wealth not just income. I can remember clearly our effort in Arkansas in the middle 1970’s to maintain a tax on “intangibles,” meaning stocks and bonds. A wealth tax lives in that neighborhood and attempts to tax stocks and bonds, as well as rich toys like yachts and art, and big time deals like trusts and unincorporated business outfits.

Why not? Campaign contributions will stop a lot of it because few politicians want to take the grease off their own wheels and create real friction, no matter how many benefits.

Anna Bernasek, the Times reporter on the wealth story, cites Canada as a good example of a country that raises revenue with a tax on “asset appreciation” creating the formula based on the increased value of assets at the death of the holder. In the USA this is a huge loophole, allowing the real rich to borrow against assets, then pass them off as part of the estate, without ever paying income tax on the increased value of the assets acquired in this manner. One proposal she cites was made by a conservative economist, Ronald McKinnon, where everyone tallies up all of their assets, exempt $3 million, and then put a 3% flat tax on what remains.

Everyone agrees, right and left, it seems that some kind of wealth tax would diminish inequality. Not everyone agrees that that would be a good thing, the golfer Phil Michelson being one good example, but for those of us who understand that more equality in our society is both a good thing and part of the secret to our future, it seems clear that one way or another, we need to talk as much about wealth these days, as we are about marginal increases in the income tax rate.